The CFTC Order requires Bridges and Empire jointly to pay restitution totaling $243,456.61 and Bridges and I.P.M. jointly to pay restitution totaling $14,854.41 to their customers. In addition, the Order imposes permanent registration and trading bans on Bridges, Empire, and I.P.M.

As explained in the Order, financed transactions in commodities with retail customers, like those engaged in by Empire and I.P.M., must be executed on or subject to the rules of an exchange approved by the CFTC. The CFTC Order finds that for two years beginning in July 2011, Empire, and subsequently I.P.M., solicited retail customers to engage in financed precious metals transactions, which were executed through Hunter Wise Commodities, LLC (Hunter Wise). Bridges directly solicited customers and supervised other telemarketers involved in solicitation. Bridges and the other telemarketers represented that a customer could purchase precious metals with just a deposit, such as 20 percent, and that the customer would receive a loan for the remaining 80 percent, according to the Order. In addition to interest on the “loan,” the customer also had to pay a commission and a mark-up on the total value of the metal. If the customer agreed to the transaction, the customer sent the deposit, commission, and mark-up to Empire or I.P.M., and the funds were ultimately transferred to Hunter Wise. In return, Hunter Wise paid Empire and I.P.M. a portion of the customer commissions and fees. Neither Empire, I.P.M., nor Hunter Wise bought, sold, loaned, stored, or transferred any physical metals for these transactions. Neither Empire, I.P.M., nor Hunter Wise actually delivered any precious metals to any customer. Notwithstanding the fact that no physical metal was involved, Empire’s and I.P.M.’s transactions were illegal because they were not executed on a registered exchange.

On December 5, 2012, the CFTC sued Hunter Wise in federal court in Florida charging it with engaging in the same type of illegal, off-exchange precious metals transactions engaged in by Empire and I.P.M. through Hunter Wise. In addition, the CFTC charged Hunter Wise with fraud and other violations (see CFTC Press Release 6447-12). On February 25, 2013, the Florida court granted a preliminary injunction against Hunter Wise, froze the firm’s assets, and appointed a corporate monitor to assume control over those assets (see CFTC Press Release 6522-13). On February 19, 2014, the court entered judgment against Hunter Wise for engaging in illegal precious metals transactions.

CFTC Division of Enforcement staff members responsible for this case are Daniel Jordan, Michael Loconte, and Rick Glaser.

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CFTC’s Precious Metals Customer Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Precious Metals Fraud Advisory, which alerts customers to precious metals fraud and lists simple ways to spot precious metals scams.

Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.